Private law redistribution, predictability, and liberty.

• Author: Keren-Paz, Tsachi

An attempt to promote equality by reformulating private law doctrine often faces the objection that such an attempt encroaches excessively on one's predictability and liberty interests, especially given the alternative, which is to redistribute through the tax system. In this article, the author attempts to reveal the shortcomings of this critique.

Concerning the effect of private law redistribution on predictability, the author argues that insurance enables policy-makers to create redistributive rules with little lost-predictability cost. Moreover, contrary to common belief, in some instances, the more egalitarian rule would also be more predictable. With respect to liberty, the author shows that, in some cases, private law redistribution might be more effective than the tax system in improving the lot of the disadvantaged. This outcome is especially likely when the normativity of law is taken into account, as well as the understanding that advancing equality involves more than progressive redistribution of wealth in society. In such cases, even if private law redistribution costs more in terms of liberty, it might be justified for its better promotion of equality. Furthermore, the critique regarding excessive encroachment on liberty concentrates exclusively on the liberty interests of the well-to-do and neglects the liberty interests of the disadvantaged. When the latter are taken into account, it is less clear that private law redistribution actually costs more in terms of liberty.

Private law redistribution might be justified on two additional grounds. First, its symbolic message might be more empowering to the disadvantaged. Private law redistribution can be seen as rectifying the existing regressive distributive effects of private law as opposed to being an act of charity. Second, even if tax redistribution enjoys theoretical superiority to private law redistribution, the latter might need to be pursued if the former is not likely to take place.

Toute tentative de promouvoir l'egalite par la reforme de la doctrine du droit prive se beurte a l'objection suivant laquelle une telle tentative empiete de facon excessive sur les interets individuels de previsibilite et de liberte. Ceci est specialement vrai si l'on considere que l'alternative est la redistribution par le systeme fiscal. Dans cet article, l'auteure cherche a mettre au jour les imperfections contenues dans cette critique.

En ce qui concerne les effets du droit prive sur la previsibilite, l'auteure avarice l'argument que l'assurance pennet aux strateges de creer des regles de redistribution ayant peu d'impact sur la previsibilite. Qui plus est, dans certains cas, contrairement a la croyance populaire, la regle plus egalitariste est aussi plus previsible. Quant a la liberte, l'auteure montre que, dans certains cas, la redistribution par le droit prive pourrait ameliorer plus efficacement le lot des defavorises que le systeme fiscal. Ce resultat est particulierement probable quand on tient compte de la normativite du droit ainsi que de la notion suivant laquelle l'avancement de l'egalite implique plus qu'une redistribution progressive des richesses dans la societe. Dans de tels cas, meme si la redistribution par le droit prive est plus onereuse du point de vue des libertes, elle peut etre justifiee par sa meilleure capacite a promouvoir l'egalite. De plus, la critique denoncant des empietements excessifs sur les libertes se concentre exclusivement sur les interes des plus aises, negligeant ceux des defavorises. Quand ces demiers sont pris en compte, il devient moins evident que la redistribution par le droit prive soit plus couteuse du point de vue des libertes.

La redistribution par le droit prive trouve deux autres justifications. D'abord, son message symbolique est plus habilitant pour les defavorises. La redistribution par le droit prive peut etre vue comme rectifiant les effets distributifs regressifs de ce demier plutot que comme tm acte de charite. Ensuite, meme si la redistribution fiscale jouit d'une superiorite theorique sur la redistribution par le droit prive, celle-ci peut etre utile s'il n'est pas probable clue celle-la ait lieu.

Introduction I. The Excessive Cost Argument: Its Assumptions and Limitations A. The Excessive Cost Argument B. A Pluralist and Contextual Approach C. The Relevance of the Likelihood That a Theoretically Superior Alternative Will Be Used II. Predictability A. In General B. Insurance and Regressive Cross-subsidy C. Predictability with respect to Timing and Extent of Participation III. Liberty A. Redistribution by Tax Law Versus Private Law: Do Both Intrude Equally on Liberty? B. Private Law Redistribution Intrudes More Than Tax-Based Redistribution--And It's a Good Thing, Too 1. In General 2. Law's Normativity and the Distinction between the Distribution and Recognition Paradigms 3. The Infiltration of Anti-egalitarian Approaches from Private to Public Law 4. Three Versions of the Argument Conclusion Introduction

One of the most fascinating debates in the literature on private law theory concerns whether private law can be used to promote distributive goals and whether such an attempt is legitimate, desirable, feasible, and effective. More specifically, the debate concerns the possible use of private law as an instrument to enhance the progressive redistribution of wealth from the rich to the poor--or otherwise advance the condition and status of members of disadvantaged groups in society. (1)

Many argue that even given a commitment by society to promote equality, there are several reasons for preferring the exclusive use of public law for the promotion of equality, mainly (within the context of wealth distribution) by means of the tax and transfer system. According to this view, there are four arguments against promoting equality by means of private law: illegitimacy, randomness, ineffectiveness, and excessive cost. (2)

Illegitimacy: The argument from illegitimacy maintains that promoting equality by means of private law raises problems of legitimacy, insofar as the task of developing legal rules is carried out by the judiciary. This is so because judges are not elected and are therefore unaccountable. The pursuit of distributive goals is essentially political in nature, and as such, should be undertaken by elected officials. (3)

Randomness: I have discussed elsewhere and attempted to refute the idea that promoting equality by means of private law would be unfair since the resulting redistribution would necessarily be partial, and its participants randomly selected. (4) Only a few among those whom we think should participate in a redistribution--on both giving and receiving ends--would in fact participate in a redistribution resulting from private law. (5) Moreover, even those who would participate would do so at levels that diverge from society's ideal. This argument, notwithstanding its merit, falls to justify neglecting private law as one instrument in pursuing distributive goals. We have no reason to believe that the result of a redistributive private law rule would be farther from what is conceived as ideal by society than the status quo. In fact, I argue that several factors suggest there is a high likelihood that the new distribution would be closer to the ideal than the initial distribution. Such an outcome would be either a direct result of the redistributive rule or a result of legislative response to the redistributive rule.

Ineffectiveness: A combination of conceptual-normative difficulties, factual uncertainty, and structural and systemic limitations arguably prevents private law from promoting the distributive result desired by society. (6) While the argument correctly points to the limited potential of private law to effect social change and progressive redistribution of wealth and other basic entitlements, it fails to support a sweeping policy of casting aside any attempt to achieve these goals through private law. Private law has a limited yet important ability to promote equality in society; its effectiveness and desirability vary with its context, but cannot be presumed to be nonexistent. Indeed, I have shown elsewhere that an egalitarian approach can bring about more desirable results in tort law. (7)

Excessive cost: According to this argument, it is undesirable to try and promote equality by means of private law since such an attempt comes at the cost of other private law goals. In other words, even if private law can bring about a distributive result superior to the status quo, accomplishing this result by using private law is too costly when set against the loss of other private law goals such as liberty, predictability, and efficiency. Given the possibility of promoting equality by alternative, less costly mechanisms, it is better not to use private law to promote distributive goals.

My position in this debate is that promoting equality should be one of the goals of private law. My approach to private law is instrumentalist, pluralist, egalitarian, and contextual. As an instrumentalist, I believe that private law should be judged, in part, by the societal effects it brings about. As a pluralist, I believe that any branch of private law should advance more than one goal, and that promoting equality is one of these goals. I do not hold that private law has an exclusive or even a major role in promoting equality nor do I think that advancing equality should be the primary goal of private law. Nonetheless, society should use private law as one instrument in the ongoing Sisyphean struggle to advance equality. My contextual approach recognizes that, in certain situations, a court might be able to estimate the effect of a given rule on the disadvantaged. When this effect is negative, it should militate against the adoption of such a rule, and vice versa when adopting the rule would promote the well-being of the disadvantaged. The fact that such a distributive effect does not...